The role of social norms for the relationship between private ownership and the performance of banking sectors in transition countries: the cases of Bulgaria and Hungary as examples

Abstract

We start with a theoretical reflection on the merits of private ownership in banking sectors concluding that the merits of private ownership in a market economy crucially depend on the overall compliance with principles of good governance. We show that it is pivotal in this respect that the underlying legal order is in action and not just on the books. Whether this is the case depends on accepted social norms which in their turn derive from cultural value orientations. We use these insights to compare the development and performance of banking sectors in Bulgaria and Hungary with the attempt to establish relationships of found differences between the countries to different basic value orientations